Posted by Cedric Joshua Martinez
Jul 19, 2023
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Interested in working with a seasoned CFO but you have a limited budget to hire one? CFO outsourcing might be the solution you’re looking for. Here’s what you need to know about this business strategy.
CFO outsourcing introduces a new way of working with seasoned chief financial officers (CFOs) for a fraction of the cost. To know more about it, this article delves into the definition of CFO outsourcing, how you can benefit from it and the list of CFO services you can outsource.
What is CFO outsourcing?
CFO outsourcing is the business activity of hiring external chief financial officers (CFOs) on an hourly, part-time or contractual basis.
Outsourced CFOs, who are otherwise known as fractional CFOs, are ideal for startups and small- to mid-sized businesses that need expert advice but have a limited budget to hire a full-time finance chief.
Related: The CFO's Critical Role in Driving Business Transformation
What are outsourced CFO services?
Outsourced CFO services include similar services provided by in-house CFOs, including:
- Business advisory
- Consulting
- Strategic planning
- Budgeting
- Financial forecasting
- Reporting
- Scenario modeling
- Cash flow analysis
- Customer contract reviews
- … and more.
In other words, you can entrust high-impact accounting tasks that are beyond the expertise of your in-house accounting team to your trusted outsourced CFO.
Benefits of outsourcing CFO services
As long as you choose the right service provider, outsourced CFO services can give you the following benefits:
1. Cost-effective
CFO outsourcing is a cost-effective solution for businesses with no in-house finance chiefs.
Through this option, companies who do not have the resources to get a full-time CFO on board can get the expertise they need, whenever necessary.
2. High-level financial strategies
Outsourced CFOs have experience working with multiple clients from various industries.
As a result, they have extensive knowledge about how the market works and how it affects distinct types of businesses — giving them the ability to produce high-level financial strategies.
These strategies can be helpful when you find yourself stuck doing the same old processes that no longer yield meaningful results.
This article from the International Federation of Accountants (IFAC) also sets out the role of CFOs in adding value to an organization.
3. Short- and long-term forecasting
Business and financial forecasts set the direction for your business. However, it requires a tremendous understanding of your business, your financial position and the trends in your industry. Good thing, an outsourced CFO can help you prepare it.
4. Timely compliance
While CFOs are more concerned with management and growth, compliance remains a top priority for any business.
Compliance and financial reporting requirements often change, and businesses experiencing rapid growth need expert advice to ensure that businesses meet the right requirements.
5. Scalable solutions
Outsourced CFO services are adaptive. It means you can start by availing select services only — either on an hourly or part-time basis — and gradually expand as your needs change over time. At the same time, it also gives you the freedom to scale down as needed.
This means that through outsourcing, you can have the flexibility you need to adapt to the ever-changing requirements of your business.
In summary, outsourced CFO solutions can help you adjust your strategies to meet your goals while keeping the expenses low compared to having a full-time CFO on board.
Read next: A Comprehensive Guide to Outsourcing CFO Support Services
When should you outsource CFO services?
It's time to outsource CFO services if you’re experiencing any of the issues below:
- Your financial strategy no longer seems to match your goals.
- You or your in-house accountants are not confident in making sensitive financial decisions.
- You need strategic financial expertise for only a brief period.
- You lack the budget to hire an in-house finance executive.
- You need help in managing your in-house accounting team.
- You constantly encounter complex financial issues and no one from your business knows how to address them.
If you checked any of the items above, you may want to consider outsourcing CFO services.
But how can you find the right fit?
How to choose the right CFO outsourcing service provider
To ensure you’re working with a reliable CFO, be on the lookout for the following:
1. Industry experience
Each industry has various nuances, especially when it comes to the accounting regulations and requirements they must follow. That’s why when interviewing potential providers, be inquisitive about their experience in your industry.
You may interview them about the clients they’ve already worked with. Asking them for copies of case studies can also help you assess if they’re the right fit for your entity.
2. Service quality
Find a service provider who can deliver top-notch quality service. Look into the expertise of their CFOs, customer service and even tools.
Another practical way to know if a service provider is good or not is by looking at their client testimonials. Conducting due diligence before starting any engagement is also good practice.
3. Accessibility
Your outsourced CFO should be easy to contact and communicate with. Not because they only provide part-time and contractual services does not mean they can give you a substandard level of communication.
Otherwise, it defeats the purpose of outsourcing a CFO to get timely financial insights and advice about your business.
See to it that you ask a provider about their methods of communication, including their average response times.
4. Transparency and accountability
The service provider should be transparent in their hiring processes, workflows, capabilities and prices.
5. Cost of service
Of course, your budget must meet the price tag of an outsourced CFO. When sending an inquiry, you can ask a service provider for a quotation of their CFO services. Just make sure to indicate your complete requirements. This way, you can get a more accurate quote.
Looking for outsourced CFO solutions?
D&V Philippines provides reliable and scalable CFO support to help businesses make smarter decisions.
Contact us today or download our Premium CFO Solutions whitepaper to find out how we can help you in every step of your growth.
This article was first published on 09 June 2020 and updated on 04 July 2023 for relevancy and comprehensiveness. Edited by: Mary Milorrie Campos
